What all grounds available to terminate the employee?
Which ground of termination is legal under any indian laws? that means no indian judge can say the termination is legally wrong.
Please help with your valuable answers.
12th September 2017 From India, Bengaluru

Labour Law & Hr Consultant
Amit Aishwary Choudhary
Managing People At Work.
Aniket Pathak
Sr. Officer Hr
Arunachala Nataraj
Senior Manager -hr
Software Engineer

Dear Sirs,

There can be many grounds and reasons which can result in the termination of an employee which are as follows:

1. Inefficiency of an employee-

If the employer finds that the employee is not efficient enough and is not adding to the growth and productivity of the business due to its poor and low performance, then it is a strong reason for the termination. Though generally this clause is not inserted in the contracts, but in recent times there is clause in the contract relating to achieving a specific target in a certain time period, which if not achieved can lead to termination.

2. If the Confidential Provisions of the Company are disclosed-

It is the moral and legal duty of the employees to not to dispose any trade secret, confidential data, and discussions and policies to any third party who is not associated with the company, which in turn can lead to losses and damage to the business.

3. If there is breach of the employment contract-

If the employee violates the terms and clauses mentioned in the contract and does not perform according to the conditions on the basis of which he was hired and posted at a particular designation, then the employer can use it as a strong reason for the retrenchment.

4. If there is any misconduct on the part of the employee-

If the employee acts outside its authority and indulges in any improper behavior and misconduct which may cause loss, damage to the enterprise, then in those circumstances the employer can rightly terminate the employment contract.

5.Termination due to absconding of an employee-.

There are no set rules. Time limit can vary as per standing orders of the company but mostly it is 10 days as is in the model standing order. A show cause notice is issued if there is no reply to the mails or calls. But full and final settlement is done only after he shows after giving an opportunity to clarify for the same.

6. Due to Downsizing: It means reducing the size of Organization. It is a restructuring process in which the organization disposes off its non-core activities. Organization can eliminate certain jobs to improve work efficiency and reduces staff which is excess of its needs i.e. reduces staff/ surplus employees against its actual requirement.

## Workman in the Industrial Sector, in which the termination policy is governed by the Industrial Dispute Act, 1947.

## As per the Section 2(o o) of the Indian Disputes Act, 1947

“Retrenchment” refers to the termination of service as a punishment or for any other reason, whatsoever
Section 25 F defines the conditions that need to be performed for Retrenchment of employee who has been in continuous service for not less than one year. Its means permanent termination of an employee's services for economical reason in a running industrial unit.

## As per the Section 2(kkk) of the Indian Disputes Act, 1947

" Lay-off" leads to termination of employees when there is no work in the organization. It may be temporary or permanent removal of surplus staff from the payroll to reduce the financial burden on the organization.

# As per Section 79 of the Factories Act, 1948 the dues should be payable before the expiry of the second working day when the employment is terminated.

# As per the Section 7(3) of the Payment of Gratuity Act, 1972, gratuity is payable within 30 days. And as per Section 4 it is payable to an employee who has served for 5 years or more.

# An employee is also entitled to the leave encashment for the leaves accrued.

# If the establishment falls under the Shops and Establishments Act which is different for every state then, in case of white collar employees, if the employee is terminated then the payment is carried out post the last working day and if there is normal resignation, then the full and final settlement of dues should generally be made within 45 days.

## What manner is adopted by companies for termination of employment of White-Collar employees?

Almost all the employment contracts specifically mention the clause which states the period of notice that is to be given to the employees before his/her employment stands terminated. Usually all the contracts offer “30-90 days notice or salary in lieu thereof”. This period can be changed as per the company policy and can vary from one company to another. The termination of employment should also be supported with a strong and reasonable ground which is very essential.

##Termination of Employment of White Collar Employees

Since there are no specific legislation governing the white collar workers, so their service conditions are basically governed by the clauses and terms and conditions mentioned in their individual employment contracts which is governed by some basic provisions mentioned in the Indian Contract Act, 1872.


12th September 2017 From India, Delhi
Dear Sairam,
Since your post ascribes the aspect of unquestionable legality to the termination of an employee, it relates only to the unilateral termination of the contract of employment with the employee concerned by the employer on his own. Simply put, your question is:
what are the types of lawful termination of the services of an employee by his employer?
To the best of my knowledge and belief the answer is as follows:
1) DISMISSAL: An employee can be terminated or dismissed by his employer on the ground of specific and proven misconduct. Since dismissal attaches stigma to the character of the employee, affects his terminal benefits and his future employment, the entire process of disciplinary action culminating in dismissal should be in strict compliance with the Principles of Natural Justice. Even slight departure in this regard would be seriously viewed by the Judiciary and the dismissal could be set aside.
2) DISCHARGE: The employer can discharge an employee on the ground of (i) non-renewal of the contract of employment between the employer and the employee concerned on its expiry or as per the stipulation, if any contained in the contract (ii) continued ill-health of the employee.
3) RETRENCHMENT: It is the termination of the services of an employee for whatever reason other than dismissal on the ground of misconduct and discharge as explained in items (i) and (ii) above.But before discharging a workman the conditions stipulated as to notice, payment of retrenchment compensation and permission from the appropriate Govt as per sec.25-F or 25-N shall be complied with by the employer.
12th September 2017 From India, Salem
thank you for your answers. i have a follow up queries on 1) inefficiency of an employee

if an employer terminates the employee on the ground of inefficiency or poor performance, what are the benefits an employee can lose?

is it an acceptable and legally right in the eyes of any indian judge in court?
12th September 2017 From India, Bengaluru
Dear sairam,
If the answers to below given questions are in yes then it is legally right,
Did HR or Manager Inform/warn him in writing about his poor performance?
Do you have enough proof to show that employee was inefficient?
Do you provide him with proper training for given job & maintained the record of the same?
Do employee got the chance to show improvement in his performance?
Did you put him in some program to improve efficiency?
Was he warned in writing about losing his job if failed to show improvement?
was the employee on probation?

FOr the question what benefits he lose? He will loose his job rest you have to pay him till his last working day.
12th September 2017 From India, Pune
assuming everything is done to protect the job but then there are no projects/work available or the employee hardly improved anything on the given project, this termination of him is legally right?

benefits i mean to say gratuity, will he lose gratuity after termination of employee due to poor performance?
12th September 2017 From India, Bengaluru
No.. Gratuity has to be paid.... unless the employee has been terminated on moral turpitude...which is very difficult to prove OR any damage has been caused by the employee to the Assets of the Company.

13th September 2017 From India, Mysore
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